Editorial: High stakes make benefit battle well worth city's trouble

The city of Redding is already tied up in plenty of lawsuits – over its rules governing speakers in front of the library, over the finances of Redding Electric Utility, over routine disputes with contractors. Does it need one more – appealed to the California Supreme Court no less?

Well, given the multimillion-dollar stakes – and the overwhelming public vote backing up the city's new approach — we can't fault the City Council for continuing its legal fight to reform the way it awards health benefits to retired employees, as it decided to do last week.

Until 2010, the city had for years routinely paid half the cost of retired employees' medical premiums, if they wanted to keep their city-supplied health plan. That year, the council imposed a contract on the union representing Redding Electric Utility's line workers that instead only paid a share of retirees' health benefits based on how long they'd worked for the city, building up at 2 percent per year. That fall, the voters endorsed the idea for all employees by a lopsided margin via Measure B.

The shift was a bitter blow to the unions, but vital for the taxpayers and ratepayers. Ever-rising health care costs had created an immense hidden debt for the city, which accounting rules phased in over the past decade suddenly made plain. In 2007, actuaries tallied up what the city owes – and the figure came to $90 million, a number that city leaders could not in good conscience ignore.

The new requirement – earning retirement health benefits over time – rewards loyal employees and avoids massive expense to the taxpayers for relatively short-tenured workers.

The crux of the legal fight, though, is how to shift to the new system. The city imposed its new terms on members of the International Brotherhood of Electrical Workers – even those who'd been hired under the old system.

Is that illegally reneging on a promise? Or is it an ordinary shift in the terms of employment?

The union argues that a deal's a deal. The city says it is not locked into offering health benefits under the precise terms under which employees were hired. Courts so far have disagreed with each other; the Court of Appeal favored the union.

It's not a simple case, but the city's argument has a lot behind it. Health plans change every year – and as health costs have risen they've routinely become less generous, with rising co-payments, restrictions on how medicines are ordered, penalties for seeing "out-of-network" doctors, etc. Changing the underlying formula that calculates how much of the insurance premium the city pays isn't so different.

And much as we might like to live in such a world, we do not, after all, have a right to be free of unpleasant changes.

That said, state law strictly guarantees pension benefits for public employees. The IBEW workers' claim that their health benefits deserve similar protection might stand up.

More broadly, the stakes of the case are high not just for Redding, but for the entire state.

An aging population, the retirement of the baby boomers, rising health medical costs and poor investment returns are combining to put intense pressure on government budgets.

That financial crunch might ease but won't go away entirely even when the economy rebounds and tax revenues climb again.

The government – which ultimately means the taxpayers – cannot casually break promises when they become inconvenient. And it would be morally intolerably to pull the rug out from under retirees.

But we must find a balanced way to ensure that we can pay for needed public services today and for the next generation without having ill-considered retirement promises entirely drain the public treasury.

One way or another, the state's highest court will have to settle these issues. If Redding has to lead the way, so be it.